2013 results show strong Group performance despite difficult trading environment
24 April 2014
24th April, 2014: An Post today published its Annual Report for 2013, the key points of which are:
• An Post Group turnover was €811.7m, an increase on the 2012 figure of €807.3m as a result of the Company’s focus on growing revenue across the Group’s activities.
• The Group had an operating loss of €11.4 million before exceptional items. This represents a solid improvement on the previous year’s operating loss of €17.5m.
• An exceptional credit of €17.1m (relating to the accountancy treatment of the change in the Pension Scheme, together with an offset to provide for future voluntary severance / voluntary early retirement payments), resulted in an overall group operating profit of €5.7 million and a profit after tax of €5.9 million.
• Record 22% growth in contract parcels and packet volume driven by online shopping.
• Significant agreement concluded with staff to address Pension Scheme’s fund deficit.
• Change and cost reduction targets achieved including a 335 FTE staff reduction.
Commenting on the 2013 results, An Post Chief Executive, Donal Connell said:
“This positive progress has strengthened the Company as it faces the challenges ahead. We continued to focus on cost containment, productivity and efficiency improvement alongside strategic investment in revenue-generating business streams across letters, parcel, retail and financial services and Group Companies.
“Our ongoing investment in world class mails infrastructure and innovation has enabled us to capitalise on consumer trends and to win new national and international business resulting in a 22% increase in our contract parcels volume, a revenue stream that we intend to grow steadily. Quality of service performances of 94.7% for inbound and 89.5% for outbound international mail once again exceeded targets. This is of key importance to customers and for winning new business,” he added.
Looking to the future Mr Connell said that An Post continues to operate in a difficult trading environment:
“We are also keen to develop further products and services to facilitate the government’s drive for greater efficiencies. We continue to develop initiatives to support the delivery of parcels and packets, new investment products and the development of our retail business.
“In the context of financial inclusion, we believe that An Post can facilitate the effective introduction of a Basic Bank Account. We aim to play our part in the implementation of this important aspect of Government policy.
“The coming years will be of pivotal importance to the future of An Post. Volume decline is certainly challenging the basis of postal economics and regular planned price adjustments, to be facilitated by the incoming Price Cap Mechanism, will be essential.
“To date we have achieved annualised core operating cost savings of over €100m and constructive dialogue continues in our efforts to reduce staff numbers by a further 1,000 over the next five years. We will be driving growth in our Group Companies, optimising quality of service, maintaining cost competitiveness and supporting innovation and continued employee engagement”, he concluded.
Mails
While traditional mail volume continued to fall, at 2% (5% in 2012), this decline was at a slower pace than in previous years, as the economic climate started to show signs of recovery. Overall, traditional mail volume has declined by almost 30% since the 2007 peak. A €40m investment – the latest phase of An Post’s Mails Automation Programme - was completed on time and within budget and will drive further quality improvement and cost savings.
Retail
Retail revenue was on a par with the previous year with products such as foreign exchange (sterling and dollar sales) up €5.2m (18%) in the year. The State Savings fund grew by a further €1.9 billion to more than €18bn; - this now represents 16% of all personal savings in the country and a three-fold increase in the fund since 2008.
An Post won the Department of Social Protection (DSP) contract for the provision of cash payments to DSP clients across the country and strategic business relationships with financial services companies such as Aviva, AIB and KBC continued to achieve steady growth during the year.
New Products
There was significant investment in encouraging Mails usage across the SME and marketing sectors and the provision of SME master-classes, research, workshops and expert speakers at An Post-organised events.
The Company also invested in innovation and research in areas such as Mails Automation; the use of mobile scanners by all postal collection and delivery staff and the employment of Innovation specialists to fast-track the research and development of new products and services.
Group Companies
Group companies, including One Direct, The Gift Voucher Shop, PostPoint and the UK-based Air Business, increased their revenue to €121m, a €10m improvement on the prior year; each business is in a strong position in its particular market and benefits from its linkage with An Post.
During 2013 An Post also assembled the Premier Lotteries Ireland Ltd consortium (PLI), which won the licence to operate the National Lottery for a 20-year period. The Company welcomes this partnership with Ontario Teachers’ Pension Plan (OTPP) to ensure continued success in providing funds for good causes and a solid return on this strategic business investment.
Pension Fund
A proposal to address the superannuation scheme deficit was agreed with the An Post Group of Unions. This was approved by the Board of An Post and by the Minister for Communications, Energy and Natural Resources, with the concurrence of the Minister for Public Expenditure and Reform. The agreed plan to address the Minimum Funding Standard has been submitted for approval to the Pensions Authority.
Sustainability
The Company is focussed on retaining the ISO 50001 Building Energy Standard and achieving ISO 14001 Environmental Management accreditation. An Post is on track to achieve a Government target of 33% improvement in energy efficiency by 2020 (based on 2010 performance) and will reach its carbon emissions reduction target well ahead of that deadline.
An Post Chairman Christoph Mueller said that while the improvement in the Company’s finances was welcome, it is now critical to create a long term financial model to ensure the financial strength required for a sustainable national postal service.
“A new roadmap for the next five years has been developed. We will continue to grow An Post as the best provider of everyday postal, retail, communication and financial services in the Irish market. The current five-day delivery Universal Service Obligation incurred a substantial loss in 2013 and it was cross-subsidised by the Group’s other commercial activities, notably new business. We intend to continue the provision of this service in the coming years; however this may not be sustainable on an ongoing basis as traditional mail volumes are further substituted by new technologies.
We have developed a business management framework that is focused on economic efficiency and sustainability, addressing the future configuration of our mails services as well as the continued viability of the retail network. Our approach to the coming years is based on the inherent strengths within the An Post Group of companies, including product offerings in added value mail service, insurance products and innovative transaction services such as foreign exchange cards.
This leverages the Company’s unique geographic coverage, significant and diverse product portfolio, technological capacity, human capital and capacity for innovation. It is also based on the values that customers have traditionally associated with An Post – reliability, security, proximity and trust,” he concluded.
